The great success of the mid-nineties of the group The Smashing Punkings was titled Belive (believe). And if we believe two analysis firms such as Goldman Sachs and Jefferies, this year, Airbnb, the largest tourist rental housing platform in the world, with more than eight million listings and five million landlords, will achieve its record turnover since it was born. in 2008. Then it seemed like just another San Francisco startup. Now it’s different. Goldman Sachs analysts estimate that this year they will obtain income of 10,995 million dollars (just over 10,100 million euros) and Jefferies exceeds them to 11,008 million. They represent 10.9% and 11%, respectively, above their historical maximum last year, when it reached 9,917 million.
However, this paragraph of figures and percentages is mixed with words. The lyrics of the song are different and that’s where the problems begin. Even the experts at the investment bank Jefferies raise it, along with various doubts, in their report on the company’s accounts. “What is the effect of the company on access to housing?” That is its great burden.
“According to economic literature,” says a recent study by the Bank of Spain, “in areas where tourist rentals would have reduced the housing potential for residential use, greater relative increases in real estate prices would occur.” The institution estimates that there are some 350,000 homes in Spain dedicated to this type of accommodation. Around 10% of the size of the residential rental market. The percentage may seem low, but there are cities where the pressure is enormous. In the center of Seville, the number of tourist accommodation is 1.5 times higher than residential rentals. Palma de Mallorca banned new holiday apartments in May; The Canary Islands, in its draft law, requires express permission from neighbors and eliminates them in stressed areas, and Barcelona will close them all before 2029.
Within this economic narrative, the work of economists Sofía F. Franco and Carlos Daniel Santos, The impact of Airbnb on residential property values and rents: Evidence from Portugal, Regional Science and Urban Economics (2021), reports that in Porto and Lisbon an increase of one percentage point in the proportion of houses on Airbnb causes an increase in rents of 3.2% while the researchers, Hans RA Koster, Jos van Ommeren and Nicolas Volkhausen, toured the United States in Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles, Journal of Urban Economics (2021) and concluded that the 50% reduction in The number of properties available on the platform decreased the price of housing and rents by 2%. These estimates, the report details, imply significant effects of Airbnb on property values in areas attractive to tourists (for example, an increase in home prices within a 2.5 kilometer radius of the Hollywood Walk of Fame). Hollywood).
Stock market history
A different path is Airbnb’s steps on the parquet. “Since its IPO, its share price has remained largely stagnant due, above all, to inconsistency in earnings and the company’s continued struggle to find a balance between growth and profitability,” reflects Farhan Badami. , eToro analyst. Your observation agrees with the figures. The company debuted on the stock market on December 10, 2020. In the first session, the shares rose 114%—they went from $68 to $146—in one of the best debuts in the history of Wall Street. The investor fury lasted a few more months until reaching its stock market peak on February 11 at $216. Since then, the price has gradually slid downwards. In the middle of this week, the securities were trading at $140, with a market capitalization of $90.125 million.
The challenge for the company is that each country, city or jurisdiction has its own regulations, which makes it difficult to find a universal solution. “It is also far from clear that [en España] vacation rentals are more profitable for individuals than regular rentals [no existe deducción del 50% de la base imponible de las rentas inmobiliarias y se generan muchos gastos de gestión]so we must think that the risk of non-payment or of not recovering the home is what justifies opting for this type of lease,” observes José García Montalvo, professor of Economics at the Pompeu Fabra University (UPF).
The paradox of Airbnb—like certain social networks—is that criticism is constant but the platform is used by millions of people. Its reason for being requires more and more scale. It must open more markets, improve the application with new services (that prioritize quality over volume), look for complementary businesses and adapt to specific regulations. “Because the change from ownership to use is an unstoppable trend,” predicts business owner Ángel Luis Cabiedes. “Approximately 80% of Airbnb’s top 200 markets in terms of revenue worldwide are regulated,” the company justifies in a note. He adds: “The platform has a long history of growth in highly regulated markets and works with governments to help hosts share their homes, comply with the rules and pay taxes.”
Their strategy, as we have seen, is to launch new features. Never stop. A few days ago it featured co-hosts. A network of landlords who will help manage accommodation for other owners who use the website to rent their homes. In that spirit, it also has Guest Favorites, which facilitates high-quality accommodation, Superhosts (higher-level hosts) and Airbnb Icons, intended to go beyond traditional homes. The axiom is simple: quality and growth. In the second quarter of the year, application downloads increased 25% year-on-year in global terms. It seems that geography is on their side. In Latin America, especially Peru, Colombia, Chile and Argentina, supply has been growing between 25% and 30% in the last 10 months, in year-on-year terms, and in the EMEA area (Europe, the Middle East and Africa) increased—according to Deutsche Bank—in the range of 12% to 15% every month last year. The application goes through crosswinds; It’s about believing in it or not.
The pull of sport
Next year will be important in Spain due to the launch of the Digital Single Window for Leases. The idea is that the homes that are advertised are correctly registered or they will be exposed to sanctions. The code will have to be renewed annually for all properties subject to short-term contracts. And the owners must present a list of the operations carried out the previous year. Meanwhile, the company has implemented – highlights Álvaro Romero, equity analyst at Singular Bank – currency exchange commissions in its application while its accounts benefit from major sporting events such as the Paris Olympics or the German Euro Cup. .
